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Free iPhone to Capture New Audience?

On Wednesday, traders were again looking at Apple, wondering if the company’s latest strategy would lead to much larger market share of it if would just damage the brand.

According to RBC analyst Mike Abramsky, Apple may offer customers a free iPhone this fall when they sign up for it with a wireless provider, such as AT&T.

The introduction of a free iPhone wouldn't be such a radical move, since AT&T has already priced a 3GS phone at $49. However the 3GS iPhone would work only on GSM networks, so it wouldn't work on Verizon.

The Apple faithful consider the move another brilliant advance by CEO Steve Jobs, arguing that it introduces many more people to the Apple platform. Trader Patty Edwards calls it the ‘Gillette strategy’, in other words, give away the razor and people will buy your blades. "It will probably send a whole lot more people to iTunes," she says.

However critics argue that part of Apple’s appeal is that their products have an elite and elevated quality. They say free iPhones damage the brand – not to mention profit margins.

What’s the trade?

Joe Terranova is long Apple and says he loves the stock.




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Trader disclosure: On June 29, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Adami owns (INTC); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (MT) call spreads; Jon Najarian owns (CBS) call spreads; Jon Najarian owns (HOC) call spreads; Jon Najarian owns (MA) call spreads; Jon Najarian owns (MON) call spreads; Jon Najarian owns (POT) call spreads; Jon Najarian owns (X) call spreads; Jon Najarian owns (V) call spreads; Terranova Owns (VRTS); Terranova Owns (IBM); Terranova Owns (FCX); Terranova Owns (CVI); Terranova Owns (F); Terranova Owns (AAPL); Terranova Owns (CAT); Terranova Owns (BX); Terranova Owns (HPQ); Terranova Owns (MA); Terranova Owns (PEP); Terranova Owns (MCD); Terranova Owns (JWN); Terranova Owns (TM); Terranova owns (MSFT); Terranova Owns (LULU); Terranova Owns (WFM); Terranova Owns (DAR); Terranova Owns (BJ); Terranova Owns (HAS); Terrnaova owns (DIS); Terranova Owns (XOM); Terranova Is Short (DELL); Steve Grasso owns (AKS); Steve Grasso owns (AMD); Steve Grasso owns (ASTM); Steve Grasso owns (BA); Steve Grasso owns (BAC); Steve Grasso owns (C); Steve Grasso owns (D); Steve Grasso owns (HOV); Steve Grasso owns (JPM); Steve Grasso owns (LIT); Steve Grasso owns (LPX); Steve Grasso owns (MHY); Steve Grasso owns (NDAQ); Steve Grasso owns (PFE); Steve Grasso owns (PRST)

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Anthony Scaramucci
One of 8 national finance chairs for Mitt Romney campaign
Held a fundraiser for Mitt Romney
Has contributed to the Romney campaign



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